Eib - New financing for energy efficiency loans in Lithuania with Siauliu Bankas

The European Investment Bank (EIB) and Siauliu Bankas have signed a guarantee agreement to continue and renew their funding for energy efficiency renovations of Lithuanian multi-apartment buildings. The EIB will provide a EUR 30 million guarantee from the European Regional Development Fund (ERDF) for

a portfolio of EUR 150 million in loans by Siauliu Bankas to the homeowners for the modernisation of their properties.

Technically, the operation is the first guarantee under the “Lithuanian Leveraged Fund” that was established in 2016 to maximise the funds available for the modernisation programme, which is a key government priority. With it, the Lithuanian financing situation has seen an evolution from using financial intermediaries as agents to disburse ERDF and national funds, to an ERDF-backed guarantee to banks, who will use only their own funds to give out Modernisation Loans. This final step will greatly improve the leverage of this financing, maximising the number of households that can receive cheaper loans.

“I am happy that our mentality towards public investments is shifting to a more open and innovative and our private banks get more interested in investing private funds in the national priorities such as energy efficiency in buildings. Pooling the efforts and expertise of respective public authorities and private stakeholders together is of crucial importance in order to reach the set energy efficiency goals for Lithuania. Moreover, this is the first guarantee agreement where loans for multi-apartment modernisation projects will be provided solely from banks’ private funds with a ERDF guarantee, which enables us to reach the desired leverage effect of public finance and let us finance more projects improving energy efficiency in households with less dependency on EU funds,” said the Vice Minister of Finance Mrs.Loreta Maskalioviene.

According to Vice Minister of Environment Mrs. Reda Brandisauskiene, there have been more that 2,500 multi-apartment buildings or 70,000 apartments renovated since the start of the Multi-apartment Building Modernisation Programme, total investments over this period reach EUR 600 million.

“The beginning of the Leveraged Fund’s activity is a significant step forward in the history of Multi-apartment Building Modernisation Programme’s financing. The fact that private capital funds are invested in the governmental programme demonstrates great confidence by the commercial banks, which in turn ensures a more effective and stable financing of the programme,” said Vice Minister of Environment Mrs.Reda Brandisauskiene.

“We have been participating in the Multi-apartment Modernisation Programme from the very beginning, however this agreement is of particular significance to us,” saidVytautas Sinius, Chief Executive Officer of Siauliu bankas. “For the first time the renovation projects will be financed through the new financial instrument – risk sharing via EIB’s guarantee that covers loans issued by Šiaulių bankas. By using EUR 30 million EIB will allow us to originate a five times greater portfolio of loans – EUR 150 million to be lent for a renovation of 500 apartments. Such partnership between the public and private sectors will enable the maximum utilisation of EU funds for the renovation programme.”

“Already nearly 50,000 Lithuanian households have been able to lower their energy bills through the multi-apartment modernisation programme, of which the EIB was one of the first supporters,” said EIB Vice PresidentAlexander Stubb. “With today’s agreement, we will make available more financing for those who want to refurbish their homes to a higher standard of energy efficiency. Buildings are the main emitters of CO2, so, to diminish this, every little bit helps a lot.”

The signature of the guarantee agreement follows a recent contribution of EUR 50 million by Siauliu Bankas under the Jessica II Fund of Funds, which was signed on 12 November 2018. The additional support agreed between Šiaulių bankas and the EIB will allow for further 4,000 apartments to be refurbished to higher energy efficiency standards.

Siauliu Bankas will be providing loans for the modernisation of the multi-apartment buildings via instruments approved in the legal basis. The term of the loan will be 20 years: during the first 5 years of the loan the interest rate will be fixed at 3 % and for the remainder of the loan term the interest will be set at 3 % + 6 month EURIBOR (in case of negative EURIBOR, it will be considered to be equal to 0).